Alliant Credit Union Drives for RV Loan Sales

Alliant Credit Union’s success in generating loans for recreational vehicles has led it to ramp up its sale of those loans to participating credit unions.

The Chicago-based credit union ($13 billion in assets, 539,503 members as of Sept. 30) originated $610 million in RV loans in the 12 months ending Dec. 31, and said it expects to do about as much in 2021.

Alliant ended the year with $1.3 billion of RV loans on its books, about the same as a year earlier.

RV loans made up the vast majority of its loans in the NCUA category for “all other secured non-real estate loans” with a sprinkling of loans for boats and airplanes. In September that category accounted for 15% of Alliant’s $9 billion in total loans, while the average for all credit unions was 8%.

Charles Krawitz, vice president of commercial real estate lending and loan trading, said Wednesday that Alliant’s strategy is to sell a portion of RV loans to keep the category below the board’s cap, and build a source of non-interest income through premiums and servicing fees.

It sold $64.5 million of those loans last year within a group of about 10 to 12 regular credit union participants.

“We’re always looking for new buyers,” Krawitz said.

Typically a buyer might have a large concentration of auto loans and wants to adjust its risk distribution, and has a surplus of deposits and “is looking to put that money to work,” Krawitz said. Some credit unions buy loans in a market that is new as a way of gaining experience before they start originating that type of loan themselves.

Krawitz said credit unions have often been leery of RV loans, but that their risk-adjusted returns outperform auto loans.

For Alliant’s part, it is looking for credit unions that are consistent buyers, ideally buying at least $5 million a month of RV loans.

One of its RV loan participants for the past several years has been First Peoples Community Federal Credit Union of Cumberland, Md. ($525.2 million in assets, 32,331 members).

Lynn Stuart, FPCFCU’s vice president and credit manager, said in an Alliant news release that Alliant has made the process simple.

“We have been impressed with their close attention to detail, due diligence and efficiency. From the moment we express an interest in a participation, we can receive a thorough proposal and be wrapped up in just a matter of days,” Stuart said.

Alliant began financing RVs for members in 2008, and in 2013 expanded into indirect channels focusing on larger franchise dealerships.

The RV Industry Association’s latest report showed 390,030 RV trailers and motorhomes were sold from January through November 2020. The number is only 3% more than in the first 11 months of 2019 because of a plummet in sales last spring after COVID-19 was declared a pandemic in March.

This year, the RV Industry Association forecast sales will rise nearly 20%, surpassing 500,000 units.

Krawitz said RV buyers include “digital nomads” whose jobs are remote and can work anywhere. Others are leery of staying in hotels because of the pandemic. And then, of course, there are the rising numbers of baby boomer retirees who are ready to head out on the highway, looking for adventure.

RV loans are just a small part of Alliant’s loan sales. Other credit unions bought $443 million in Alliant loans of all types last year, including home equity lines of credit, indirect auto loans, commercial loans and personal term loans. That’s up 68% from $263 million in 2019.

And it’s also a buyer of loans. The credit union said next week it expects to buy $100 million in residential solar loans from two credit unions. Krawitz said one reason is that solar lending is new to Alliant, and holding the loans will be a start in learning about the market. It said it hopes to start offering solar loans through an indirect program — perhaps later this year.